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Cyberonics rallies after former employee drops lawsuit

Cyberonics (CYBX), which develops nerve stimulation devices that are supposed to combat epilepsy and depression, is rising after former employee Andrew Hagerty dropped his lawsuit against the company on February 2. Hagerty, a former sales representative at Cyberonics, had alleged that he was improperly fired by the company, Jefferies analyst Raj Denhoy wrote in a note to investors earlier today. Moreover, Hagerty stated that Cyberonics had committed significant "broad-based improprieties," according to Denhoy. Hagerty alleged that Cyberonics had systematically committed fraud by coercing surgeons to prematurely remove the batteries from Cyberonics devices implanted in patients, short-selling blog TheStreetSweeper reported last month. Hagerty's decision to terminate the lawsuit removes an overhang from Cyberonics shares, wrote Jefferies' Denhoy, who reiterated a Buy rating on the stock. In late morning trading, Cyberonics jumped $4.37, or 10%, to $48.72.